Experts Advise PM on Economy: Boost Investment, Reforms, Address FDI Outflow

Answer: A

Statement 1 is correct. The FRBM Act, 2003, aims to ensure inter-generational equity in fiscal management, long-term macroeconomic stability, and to eliminate revenue deficit and bring down fiscal deficit. Statement 2 is correct. Capital expenditure creates assets, boosts productive capacity, and has a higher multiplier effect on economic growth compared to revenue expenditure, which is largely for consumption or administrative purposes. Statement 3 is incorrect. Rationalizing subsidies means reducing or making them more targeted, which typically leads to a *decrease* in government expenditure and thus helps in *reducing* the fiscal deficit, not increasing it, in both short and long terms.

Answer: B

Option A is incorrect. FDI outflow refers to capital leaving India as direct investments by Indian entities abroad or foreign entities divesting their direct investments in India. It is distinct from FPI outflow, which relates to investments in stocks and bonds. Option B is correct. FDI involves a lasting interest in an enterprise and often includes transfer of technology, managerial expertise, and job creation, making it more stable and beneficial for long-term growth compared to FPI, which is more volatile. Option C is incorrect. FDI outflow affects the capital account of the Balance of Payments, not directly the Current Account Deficit (CAD), which deals with trade in goods, services, and transfers. While a weak investment climate might affect both, they are distinct components. Option D is incorrect. While both private investment and FDI contribute to economic growth, they are not substitutes. FDI brings foreign capital, technology, and global market access, complementing domestic private investment and R&D efforts. Incentivizing one does not negate the need for the other.

Answer: D

Statement 1 is correct. Post-independence land reforms in India largely focused on abolishing zamindari and other intermediary tenures, regulating tenancy, and imposing land ceilings to achieve equitable distribution. Statement 2 is correct. The Model APMC Act, 2017 (and its successor, the Model APMC Act, 2020, which was part of the repealed farm laws) aimed to reform agricultural marketing by allowing direct sales from farmers, establishing private markets, and promoting e-trading, thereby reducing the dominance of traditional APMC mandis. Statement 3 is correct. Subsidies, while beneficial to farmers, can sometimes lead to overuse of certain inputs (e.g., urea fertilizer), distorting cropping patterns and causing environmental degradation (e.g., soil degradation, groundwater depletion). Rationalizing them can promote more sustainable practices and efficient resource use.

Answer: B

Statement 1 is incorrect. While AI can certainly boost manufacturing competitiveness, establishing AI centers of excellence has a broader aim: to foster innovation, research, and application of AI across various sectors (healthcare, agriculture, finance, etc.), develop a skilled workforce, and position India as a global AI hub, not just for manufacturing exports. Statement 2 is correct. 'Brain drain' is indeed the colloquial term for the emigration of highly skilled or educated people from a particular country. Statement 3 is correct. Initiatives like providing grants or incentives to encourage skilled professionals to return to their home country are specifically designed to counter 'brain drain' and are often referred to as 'reverse brain drain' or 'brain gain' strategies.